Google is making beau coup bucks because the search algorithm is done and it doesn’t take a lot of overhead to serve up a page with search results on it. These pages are richly monetized with advertising. YouTube, a Google property, is not profitable (according to Credit Suisse it will lose $470M this year) because servers, bandwidth and other software required to serve the world’s videos are stiflingly expensive.
The New York Times reports today “YouTube would continue to embrace content created users, even if it was not easy to earn revenue from it, because that content was essential to the popularity of the site.” Said Eric Schmidt, Google CEO, “Usage drives revenue opportunities. Usage always comes first at Google.”
Google is trying to monetize YouTube but floundering. I don’t have a good feeling about YouTube adding TV programs and movies to compete with Hulu and earn some jing. If they do go that route, which will be even more expensive than serving user-generated 2 minute videos, they should go the brand extension route or, better yet, come up with a new and unique pay-for brand. Peace!